Comment by postflopclarity
21 hours ago
on point 1, an important thing to know is that these markets have a non-linear fee structure where the rate is higher near 0.5 and lower near tail prices
21 hours ago
on point 1, an important thing to know is that these markets have a non-linear fee structure where the rate is higher near 0.5 and lower near tail prices
True, but from the pdf it seems like the fee charged of market makers is 1.75¢ × P × (1-P) per contract. Near P=0 that's approximately 1.75% of the notional amount invested, but near P=1 that's approximately 1.75% of the potential gain.
As I read it, the implication is that a market maker in the high-P regime needs to still have an expected edge of 1.75% to profit net of fees, which means that the 'maker return' table in this article is net negative after fees for all categories save for entertainment, media, and world events.
Fees are also waved if a market maker hits a certain monthly quota. With the recent adoption of “professional” market makers on the platform, I’m sure they can get around such fees.
I will also add to the 2nd point that some of these platforms due give fixed interest to positions in unresolved markets.